Credit cards have a way of quickly amassing thousands of dollars of debt without the debtor noticing. When there is too much debt on a credit card, the card’s minimum monthly payment becomes overwhelming, and a dead or finds themselves unable to pay off their debt. What can a credit card Holder in this position do to overcome their financial hardship?
Bankruptcy is a powerful tool to help people overcome severe financial debt, but how can it affect credit card debt? When the average bankruptcy applicant has more than $17,000 in credit card debt, bankruptcy may be more beneficial than you may expect.
How bankruptcy can help
There are two primary bankruptcy options that can benefit consumer debt: Chapter 13 and Chapter 7 bankruptcy. Each of these options manages an applicant’s debt in different ways. Depending on the unique needs of a debtor, either option could help them.
In Chapter 7 bankruptcies, the debtor will need to sell any nonessential assets like a second home or car, or heirlooms or collectibles to offset the cost of their debt. Once they apply for the money from that sale to their debt, Chapter 7 bankruptcy will discharge any remaining unsecured debt, like credit card debt, medical debt or unpaid utility bills.
Chapter 13 bankruptcies allow an applicant to restructure their unsecured debt into a monthly payment plan that lasts anywhere between three to five years. If the debtor and makes all of their monthly payments during this period, the government will discharge any remaining debt after they have finished their payments.
Find out if bankruptcy can help you
An experienced bankruptcy attorney can help you determine if you are eligible for either bankruptcy option, inform you of how that option will impact your future, and help you correctly apply for that option. Financial freedom may be as close as only a few weeks away, so talk to an attorney today to see how bankruptcy can help you.